NECESSITY, FUNCTION, AND CONFORMITY:
KRS 56.784(2) requires the Finance and Administration Cabinet to promulgate administrative
regulations to establish a process for procurement of energy savings
performance contracts, including required contract language. This
administrative regulation establishes the process for procurement of
energy-savings performance contracts.

Section 1. Definitions. (1)
"GESPC" means a guaranteed energy savings performance contract as
defined in KRS 56.770(5), and further described at KRS 56.774(5).

(2) "Memorandum of
understanding" is defined alternatively as "memorandum of
agreement" at KRS 45A.690(1)(d).

(3) "Offeror" is defined at
KRS 45A.070(6).

(4) "Owner" means:

(a) The Finance and Administration
Cabinet; or

(b) The governing board of an
institution of postsecondary education that, pursuant to KRS 164A.560(1), has
elected to perform in accordance with KRS 164A.555 to 164A.630 regarding
capital construction.

(2) If a GESPC is needed, owner shall
form a selection committee and issue an RFP.

(3) The selection committee shall
conduct a walk-through of the proposed project facility which interested potential
offerors shall attend, if indicated in the RFP.

(4) An offeror shall submit
qualifications, a preliminary proposal, and other information and documentation
as set out in the RFP.

(5) The selection committee shall
evaluate, rank, and interview each offeror in accordance with the criteria set
out in the RFP.

(6) The top-ranked offeror shall:

(a) Be notified and authorized to
perform a technical energy audit; and

(b) Submit a final proposal indicating
the scope of the guaranteed energy savings performance project.

(7) If an acceptable energy audit and
project proposal have not been approved by the selection committee within sixty
(60) days from the date of notification provided for in subsection (6) of this
section, negotiations with the next highest ranked offeror shall be initiated,
unless owner has granted an extension of time to the top-ranked offeror.

(8) Owner shall enter into a memorandum
of understanding with an entity occupying facilities involved in a guaranteed
energy savings performance project. The memorandum shall state the responsibilities
and obligations of each party, including reporting, administration, and
repayment.

(2) "A professional engineer
licensed in the state of Kentucky shall supervise, review, and approve all
design work done in relation to this project."

(3) "The term of this contract
shall not exceed the life of the energy savings generated from implementation
of the energy efficiency measures financed by the contract, in accordance with
KRS 56.770(5)."

(4) "The contractor shall maintain
specific standards of comfort, safety, and functionality as determined by the
owner. Persistent failure to maintain the defined climate and lighting
conditions shall constitute a breach of contract by the contractor."

(5) "Combined savings achieved by
the installed projects shall be sufficient to cover all project costs,
including debt service and contractor fees maintenance, monitoring, and other
services, for the duration of the contract term. If a project does not generate
the guaranteed level of savings in any predefined reconciliation term, the
contractor shall be liable to owner for the amount of the shortfall plus
related costs, in accordance with KRS 56.770(5)."

(6) "The contractor shall provide
a sufficient number of sets of operation and maintenance manuals for all
equipment replacements or upgrades at each location. The number of sets of
manuals shall be determined by owner."

(7) "Owner shall have the right to
inspect, test, and approve the work conducted under this contract during
construction and operation."

(8) "All drawings, reports, and
materials prepared by the contractor in performance of the contract shall
become the property of owner and shall be delivered to owner as needed or upon
completion of construction." (29 Ky.R. 1429; Am. 2087; eff. 2-16-03.)